After the tax period in Russia ended on January 29, 2024, the ruble began to lose value. (During the tax period, domestic exporters traditionally sell large amounts of foreign currency, which causes a decrease in the dollar and euro exchange rates. Once the sales are completed, the ruble rate usually begins to fall). At 18:59 Moscow time on January 29, the dollar rate was 88.98 rubles; this was 76 kopecks lower than the closing level of the previous trade. Meanwhile, the price of the euro decreased by 1.26 rubles to 96.13 rubles. From January 29 to 13:58 Moscow time on February 5, the price of the American currency increased by 2.22 rubles, and the price of the European currency increased by 1.97 rubles.
“At the beginning of the month, the ruble always weakens due to a decrease in foreign currency sales by exporters. “Last week, the ruble exchange rate also weakened because the Central Bank reduced its foreign exchange sales by 800 million rubles per day in foreign currency since February 1.”
— noted BCS Forex analyst Anatoly Trifonov.
In a conversation with socialbites.ca, Sovcombank chief analyst Mikhail Vasiliev added that the increased demand for foreign currency observed in recent weeks could put pressure on the ruble.
“This may be due to the purchase of imported goods by the state and/or companies, including possible advances in imports, ahead of the long Chinese New Year (February 10-24). “A negative factor for the ruble is the information that Russia is experiencing problems with oil supplies to India and agreements with Turkey due to US sanctions imposed at the end of last year,” he said.
Candidate of Economic Sciences, Director of the Federal Financial Literacy Methodological Center, Associate Professor at the Department of Global Financial Markets and Fintech at the Russian University of Economics. GV Plekhanov Denis Perepelitsa explained that the depreciation of the ruble was also facilitated by the actions of currency speculators and the fall in oil prices with the North Sea reference Brent to $ 76.9 per barrel.
In a conversation with socialbites.ca, BitRiver financial analyst Vladislav Antonov explained that the dollar is currently trading in the range of 87.6-93.3 rubles and the euro is traded in the range of 94.45-99.3 rubles.
What will be the limit of the weakening of the ruble?
According to Trifonov’s estimation, 93-94 rubles per dollar – the limit of the weakening of the Russian currency in the first quarter of 2024: in light of the upcoming elections, the authorities will try to stabilize the rate.
Vasiliev believes that in February-March the dollar will cost 87-93 rubles, and the euro will cost 94-100 rubles.
Antonov expressed the opinion that if the dollar and euro exceed the upper limits of their trading ranges (93.3 rubles and 99.3 rubles, respectively), the rates of American and European currencies can reach 95 rubles and 100 rubles, respectively. It set the limit for the weakening of the ruble exchange rate at 95 rubles per dollar and 101 rubles per euro in 2024.
“These values could be reached in the second quarter of the year against the backdrop of the continued decline in oil prices, an increase in the budget deficit and a possible weakening of the Bank of Russia’s monetary policy (reduction of key interest rates). rate from 16% – socialbites.ca). Ruble exporter sales will lag due to the presidential election campaign and tax season at the end of the month. Antonov stated that the Central Bank will take measures to stabilize the ruble exchange rate to prevent inflation from rising again.
How long American and European currencies remain at elevated levels will depend on many factors, including the economic situation in the United States and Europe, geopolitical events and the actions of central banks, the analyst said.
“It is unlikely that the dollar exchange rate will exceed 100 rubles. The ruble is one of the most undervalued currencies in the world. If we compare the gold and foreign exchange reserves of the USA and Russia with the corresponding volume of money supply, the value of the ruble may be 10 times less. Perepelitsa predicts that as Russia’s geopolitical role strengthens, the ruble will increase in price and gradually become an investment currency.
He admitted that the gradual strengthening of the ruble exchange rate will occur in 2024.
“There is no fundamental reason for the ruble to weaken significantly. The geopolitical situation will most likely develop in Russia’s favor, as a result of which the economy will improve and the ruble will strengthen. On the other hand, the situation in the USA and Europe is far from ideal, and it is possible to see a serious weakening of these currencies against the currencies of the BRICS countries (a union of nine countries: Brazil) in the short and medium term. , Russia, India, China, South Africa, United Arab Emirates, Iran, Egypt and Ethiopia – “socialbites.ca”),” explained Perepelitsa.